If you've bought a dream home in recent times, it must be a lavish one and your invested amount need to be protected against unseen misfortune by way of adequate home loan insurance cover. But home loan insurance is different from home-owners insurance cover.
Homeowners insurance protects your home and its contents from disaster, fire, theft and other perils covered by your policy. It may not be sufficient enough to cover your total invested amount. Additionally you need to do something more to protect your financial health. And here home loan insurance comes to your rescue, if an unfortunate mishap do happens and the breadwinner looses his ability to do normal work. If you're the sole breadwinner and have a huge loan to repay, a home loan insurance cover can put all uncertainties to end.
Some home owners worry if their loved ones render homeless in case of something unforeseen bad happen to them, how their spouse and children be able to repay the monthly EMI dues? With property insurance covers rates are becoming significantly low and plenty of discounts/incentives are offering by various insurance companies, homeowners can now pick a good deal. Today, most lenders do not insist on loan cover, however many offer attractive package deals that are good to consider.
Shivam, took a home loan of 50K. He was paying the EMI due to his loan company regularly for the last three years. Then tragedy struck. He met with a road accident as he rammed his two-wheeler into a public bus, but he was fortunately survived. With multiple fractures and severe spine injuries, Shivam lost his ability to do his normal work and forced to lay off. He was confined to the four walls of his house. He had survived the nightmare but the home loan dues were haunting him. Being jobless and physically challenged for life, he find it hard to accumulate the kind of big money to pay his EMIs.
Fortunately the home loan cover came to his rescue. Shivam had already repaid 1/6th of the loan amount. The home loan insurance company had now taken care of the remaining dues. When a borrower insures the home loan, the insurance company takes care of the outstanding amount that he owes to the lender.
But do you know how does an insurance company arrive at the premium amount? Like most insurance covers, to compute the premium amount, the insurance company takes into consideration the age, the medical history of the person taking the loan, the total loan amount and loan tenure. A home loan cover promises to relieve your family of the financial burden in future. But read carefully the terms and conditions of the cover. There may be certain circumstances under which the insurer may not pick up the burden of repaying your defaulted EMIs. As a home owner, go through and get clarifications, if you do not want serious shocks in the future.
Though many lenders do not make it mandatory, this additional insurance policy lowers the risk of default. For borrowers, the cover gives some much-needed peace of mind and security.